But earlier in the afternoon, investors briefly pushed the Dow down almost 1,000 points while the Toronto market lost as much as 452 points before recovering.

Nervous investors continued to pile into the perceived safe haven of the U.S. dollar, with the Canadian dollar closing down 2.08 cents to 95.03 cents US.

June oil fell $2.86 to $77.11 US a barrel, and now is down more than $10 from a high of $87.15 on Monday. June gold finished up $22.30 at $1,196.90 an ounce.

Elsewhere in New York, the Nasdaq composite index stepped back 82.65 points to 2,319.64, while the S&P 500 index fell 37.72 points to 1,128.15.

The drop came amid continuing concern among investors that an economic bailout package for debt-ridden Greece proposed by the European Union and the International Monetary Fund will not work, and the Greek crisis will spread to other high-debt European countries.

The euro dropped sharply even before the sell-off on North American markets after bond rating agency Moody's Investor Service said that Greece is not the only European country facing a debt crisis but that the banking systems in Portugal, Italy, Spain, Ireland and Britain could also be hurt by widening debt.

At the same time, Spain's borrowing costs rose at its debt auction Thursday as investors demanded higher rates from borrowers they see as riskier.

Late in the afternoon, the euro was down 1.75 cents to 1.2639 US, a drop of 1.4 per cent and its fourth decline in as many days.

'There's a lot of debt in the world, and investors don't like it.'—Peter Bethlenfalvy, DBRS

"What's happening is there's a lot of debt in the world, and investors don't like it," Peter Bethlenfalvy, co-president of ratings agency DBRS Ltd. in Toronto, told CBC News.

"It started with the ECB doing nothing," he told CBC News. "Trichet, it's all his fault, really. So, people just gave up hope. They were hoping for some dramatic action ... but he didn't do anything, so the market sold off.

Ma, who has invested significantly in bets that the world economy will slow, said he expects the market sell-off will continue.

"It's not done yet," he said. "We're not even close to being done."

Andrew Busch, global currency and public policy strategist for BMO Capital Markets, also slammed the ECB for sitting on its hands and not dramatically increasing liquidity into the marketplace.